Groupon Tanks: Five Takeaways From Its 4Q Results

Nearly a quarter of Groupon 's market value has been erased in the minutes after the company reported its fourth-quarter earnings.

Groupon swung to an unexpected loss of 12 cents per share, when analysts were expecting a loss of 2 cents per share on revenue of almost $640 million, according to S&P CapitalIQ.

Seven cents of that loss per share came from a “non-operating item,” the company said. Groupon’s fourth quarter revenue was $638.3 million, still up 30% year-over-year.

Here are a few takeaways from the earnings report:

It’s bringing in nowhere near as much cash as it was last year. Operating cash flow fell 61% year-over-year to $65.7 million, from $169.1 million in the Q4 last year. Groupon still has plenty of cash: At the end of the quarter, Groupon had $1.2 billion in cash and cash equivalents, according to the company. That buys it time to turn around.

Its first-quarter outlook is also weak. Groupon is forecasting revenue between $560 million and $610 million for the first quarter, an increase of between zero and 9% compared with Q1 last year. Analysts forecast sales of $647, according to S&P CapitalIQ.

A huge chunk of its usage is now coming from mobile. In January 2013, nearly 40% of North American transactions were completed on mobile devices, an increase of 44% compared with January 2012, the company said. That fits with the common trend of most major companies finding their audience shifting to mobile devices.

Gross customer additions were partially offset by higher customer inactivations, the company said. As of December 31, 2012, Groupon had 41.0 million active customers, an increase of 22% year-over-year, the company said.

Update: The original analyst estimate cited in this post of 3 cents per share for earnings referred to Non-GAAP earnings. It has since been replaced with analyst estimates for GAAP earnings, reflecting Groupon’s earnings report.